What does 2022 hold for the real estate market in Singapore?
Prices have risen every quarter since the circuit breaker in the second quarter of 2020, and although the pace of growth is slowing, we expect house prices to continue to rise for most of 2022.
With another 31,000 estimated HDB apartments exiting their MOP in 2022, the impact of HDB upgraders is expected to continue. Additionally, foreign investors will return to the market if Singapore continues to reopen its borders through the Vaccinated Traffic Lanes (VTL).
In 2022, we only expect about 11 new launch projects. This lack of new launches is due to the fact that the government has actively reduced the supply of land over the past few years. With the GLS pipeline shrinking, there has been a slight buzz on the collective sales scene this year.
In Q3 2021, around 25 new bulk sites were tendered, compared to just 11 last year. It remains to be seen how many will ultimately be sold. This will determine the supply for the next few years.
In response to the COVID-19 pandemic, the US Federal Reserve cut interest rates to near zero at the start of 2020. Global interest rates and local mortgage rates recovered slightly in 2021, but remained mostly weak. Access to affordable credit has contributed to the recent home buying spree, as it is much cheaper to take out a home loan now than it has been in years.
Recently, the US Fed has announced its intention to raise interest rates at least twice in 2022. Although a sudden spike is unlikely, it will inevitably lead to a gradual increase in mortgage rates in Singapore.